Wendy Brown

The last few weeks have seen the State of Rhode Island and much of southeastern Connecticut devastated by flooding. The damage to infrastructure, businesses, and homes has been unprecendented.

Here is some helpful information for Southern RI business owners:

The RI Dept of Labor & Training and the RI-EDC will present emergency response sessions to provide information on Disaster Unemployment Insurance Procedures and options for financial assistance for impacted business owners.

Monday, April 5, 2010 from 9 AM to 12 PM

Beechwood Community Center,10 Beech Street, North Kingstown, RI 02852

To reserve your seat, call the NK Chamber 401-295-5566 or RIDLT at 401-462-8724.

Monday, April 5, 2010 from 2 PM - 4 PM

Westerly Chamber of Commerce, 1 Chamber Way, Westerly, RI 02891-2670

To reserve your seat, call the NK Chamber 401-295-5566 or RIDLT at 401-462-8724.

For real estate practitioners and FHA buyers:

FHA has ordered all properties that are being considered for FHA financing to be re-inspected by appraisers if the appraisal was done before the flooding. They want to make sure that the property suffered no flooding or water damage and is substantially in the same condition.

For real estate practitioners and buyers of property in flood zones:

When Congress adjourned for Easter break, they failed to renew the National Flood Insurance Program so check with your insurance provider to be sure that you have flood insurance in place...or plan to close after Congress is back in session and has dealt with this oversight.

As part of the Making Homes Affordable program (HAMP), the new Home Affordable Foreclosure Alternatives Program (HAFA) goes into effect April 5th. The National Association of Realtors has the summary of this at www.realtor.org/shortsales. Under the new program, if a borrower meets the eligibility requirements, they would not have to face a deficiency judgment and would get some cash to move.

Will it work? I'm hoping so, but have my reservations. HAMP was a noble proposal for those who wanted to keep their homes, but, due to unforeseen circumstances, were struggling to make their mortgage payments. But if you've talked with anyone who has tried to get a loan modification, it is a frustrating and often painful process. One person I know has re-submitted their application and supporting documents three times. The typical loan modification process can take up to six months before an answer is forthcoming. The idea was to offer relief BEFORE a borrower was in default, but that is a rare occurrence. The program was left in the hands of the lenders to execute and the lenders were and still are ill-equipped to handle it.

Now the government is asking these same lenders to have their loss mitigation departments learn something new called HAFA to deal with short sales...something that, for the most part, the lenders are not dealing with well now. Although it goes in effect in two days, my sense is that it will take a while to even be known by the loss mitigation departments, let alone executed.

With short sales, each situation is different. A FHA short sale differs from a Fannie Mae short sale which differs from a short sale with a first and second lienholder. They are complicated, time consuming, frustrating and, at times, heartbreaking. HAFA is a ray of sunshine for those wanting to avoid foreclosure but must sell their home. I'm hoping it will help make short sales take less time to conclude.

If you are considering a short sale, it is in your best interest to work with someone who knows what they are doing. NAR has a new designation: SFR which stands for Short Sale and Foreclosure Resource. The Realtors who have this designation have been trained to do short sales and to give advice regarding alternatives to foreclosure. There is also another designation: CDPE which stands for Certified Distressed Property Expert.

I meet people all the time who ask me the question, "What's my home worth?" My favorite answer is, "It depends."

We all know the definitions: market value is the estimated price at which an informed buyer will buy in an arm's length transaction; assessed value is the value upon which taxes are assessed as determined by either a contract appraisal firm or a government official; appraised value is the value that an appraiser given directions as to the purpose of the appraisal (because the purpose matters!) reaches; replacement cost is the cost to replace the existing structure should the need arise. Heck we can throw in estate value and, finally, sales price. Then we can ask the question, how can you assign a value to a home when that's the center of your familial and emotional life?

We didn't actually ask that question in the past unless we were going to sell the house or refinance...because it was our home. Now it's viewed as an investment, collateral, retirement fund...a commodity.

So, taking into consideration today's definition of home as a commodity, I guess the question really is what do you want to do? If you want to sell, how soon? If you want to sell are you willing to invest a bit more to improve the condition or are you selling "as is"? If you want to sell, how flexible will you be with showings, exposure, etc.?

Let's take a few real life examples. A bank owned property was recently priced so attractively that it had over 60 showings in the first three days it was listed and resulted in multiple offers. The offer accepted was well over the list price. The listing agent had been directed to price it so it would sell within 30 days, so the price was deliberately lower than anything around it had sold for in the last six months. The "auction" atmosphere was deliberate.

Another property that was listed was strategically done. After a review of all the statistical information available, it was determined that the house should be price just below a price tier (e.g. $300,000 to $399,999, $400,000 to $499,999) that wasn't moving very well. Although the home could have sold for more over a longer period of time, the seller agreed to price slightly (i.e. $2,000) below the price tier that wasn't moving. It appeared to be well-priced, was shown quite a few times in the first few days and was sold at list price three days after it was listed. Again, a type of auction atmosphere was created, but not a frenzy...only those who recognized it for the bargain it was priced below its fair market value.

And yet another property was listed at a price that the seller wanted to net out of the property. The price is reasonable based on comparable properties. It's been listed for six months, is shown rarely (about once a month) and that's fine with the seller. Their goals were different than the other listings mentioned.

So, when asking the question, "What is my home worth?" be sure to explain what you intend to do with the answer and the timing that you have in mind in which to take that action.

There are all sorts of ideas about getting your house ready to sell, but the first thing any seller needs to do is decide they are going to sell...not just try to sell it. The difference in attitude is crucial to getting ready to sell your house.

Once the decision to sell is made, your home now becomes a product and, as such, you need to think about packaging or presenting your product in the marketplace. Here are some ideas:

1. Solicit advice from professionals...objective advice is invaluable!
2. Pack up the clutter. You are going to be moving anyway, so start the packing now with all of the items that are not critical to your day to day living or the staging of your home.
3. Remove personal photos and mementos...they are distracting when people come through to see the house.
4. Walk into your house as if for the first time. Does the front door need paint? New hardware? New welcome mat? How are the plantings? First impressions matter!
5. Clean the windows! We recently saw a dramatic increase in activity (and eventual sales price!) when a seller painted the trim and cleaned the windows in the front of the house.
6. Get rid of the cause of bad odors...don't try to mask them! Using a floral deodorizer is often much worse than the smell that it is designed to hide! Whether it is a litter box or teenage boys' feet...be prepared to hear about it and do something about it!
7. Make it sparkle!
8. Figure out where you are going to go during showings...don't plan on being there! Buyers spend more time looking at the house if the seller isn't there.
9. Take care of all the routine maintenance on equipment...service the boiler, change your air filters, vacuum under your refrigerator, clean your oven...it all shows pride of ownership.
10. Pack up your off season clothing and organize your closets...less clothing makes closets look bigger.
11. Consider a home inspection prior to sale so you will know what a buyer's inspector is going to see...help eliminate surprises. Many home inspection companies offer pre-inspection reports at discounted prices.
12. When you think you are done, give us a call and we'll give you our uncensored opinion!
13. Now the hard part...keep it neat and clean and ready for last minute showings!

Every time I talk with a customer about Buyer Agency, they always ask "Am I going to have to pay the commission?" My short answer is, you already will be.

Who brings the money to the transaction when a house is purchased? The buyer does. Unbeknownst to the buyer, the seller has entered into a listing contract stating how much commission he is willing to pay for the sale of the home. For our example, let's say 6%. In that listing contract, the seller and listing agent agree to offer compensation to a cooperating agent (a buyer's agent). Again, for our example, let's say it's 3% being offered to the cooperating agent. So the buyer, without being consulted, has agreed to pay a 6% commission...because it is included in the purchase price.

Is the buyer paying any more for representation in this scenario? Probably not. But let's cover some other scenarios.

A buyer enters into a buyer representation agreement with an agent and agrees to pay 3%. The buyer decides to purchase a property where the cooperating agent is being offered 2 ½%. What happens to the other ½%? There are several answers to that. The buyer can ask the seller to pay the difference or the buyer can pay the difference at closing. If the buyer has to pay the difference at closing, perhaps he would offer ½% less in the purchase price to cover the difference.

Another scenario is that the buyer wants to purchase a house where NO compensation is offered to a buyer's agent (e.g. a for sale by owner property). Again, he can ask the seller to pay the buyer agency commission or the buyer can offer less for the property to compensate for the commission that is being paid to the buyer agent. Either way, it is coming from the buyer's cash at closing!

Bottom line is that the buyer pays no more for representation than without it...and may actually pay more going without representation because there is no advocate for the buyer in the transaction. Remember, a buyer ‘s agent is working only for the buyer to get the best price possible regardless of the commission offered, implied or sought.